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Coronavirus, a global pandemic has emerged as a major threat especially hurting the global economy, finance and trade. Originated from China’s Hubei province, Wuhan city. It originated and spread everywhere from an animal market in Wuhan. The pandemic has seen many deaths, especially, in the USA, Canada, Italy, Spain, China, France, U.K., and Hong Kong. Known by its medical name as ‘COVID-19’ as it spreads across China to the rest of the world.

The reactions of the global financial markets came late, not until two weeks before. It was when the virus started spreading across the middle east including Iran and most countries of Europe.

most affected countries with COVID
most affected countries with COVID


The most suffered country to date is Italy. However, Spain, UK, Germany, and France have also suffered in terms of deaths and the economy. The COVID-19 risks have raised many eyebrows with fears that there could be recessions on the global economy. Something similar to what came in 2009, 11 years from today and it affected most continents. However, if we talk with respect to investments, the country risks have fluctuated and varied because of coronavirus. There have been huge variances in the European continent. Italy is suffering the most with a complete lockdown for weeks resulting in a downward graph in Total GDP. The forecasts for GDP have been dubious. This is especially true for many affected countries especially the ones in the top 10 Total GDP list.

Hence, there are confusions over how effective are the containment efforts. The immense losses have also proved that recovery will not arrive soon. Significant negative change overreactions of consumers and pricing strategies, as prices have increased in most industries.

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The COVID-19 economical impacts can’t be predictable in a short period of time. Economists all over the world are of the opinion that it should take at least 4-5 months for recovery. This is only applicable if the virus gets under control soon. However, if the situation gets worse. Hence, the recovery process time from coronavirus might increase. This is highly dependent on the scenario, circumstances, and total time frame.


According to the most recent statistics, COVID-19 or Coronavirus has been reported with 386,962 cases from the whole world. This includes 16,751 deaths reported and 102,404 recovered. The most suffered country to date in Italy with 6,077 deaths. This is followed by China 3,277 deaths & Spain 2,318 deaths. However, the USA has been on a lower side with 582 deaths, Iran 1,934 deaths. The European countries France, 860 deaths and U.K. 335 deaths are lesser affected.


The market responses have never been uniform globally. However, the facts and financial analysis have shown that they are on the pathway of recession. What’s The Pathway of Recession? It means that markets will be seeing a global recession soon. This is something similar that caused the global economy to downfall some 11 years from today. Major continents that were affected earlier with recession were North America, South America. It also includes Europe and parts of Asia that includes Central Asia. Hence, the mechanical models of recession risks have ticked on the higher side. This means that the world is not undergoing a recession currently. However, there are a tendency i.e. risks associated with recession due to coronavirus.

‘Recession’, is an economic situation or a business cycle contraction. It arises due to some economic conditions causing a general decline in economic activity. These conditions can be for e.g. War, Political Turmoil, Pandemic, or a financial crisis situation.

While we discuss the valuation of the risk assets, similar responses may vary due to the COVID-19 impacts. However, something positive is that credit markets not getting highly affected. This means, don’t foresee funding and financing problems. In addition to this neither there are any job crisis situations arising due to ‘COVID-19’. Most people are allowed to work from home especially in case of a lockdown.

COVID induced recession
COVID induced recession


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While we discuss recessions more closely and finding out why they arise, and how they impact the global economy. We need to discuss the various types of recessions in detail.

Real Recession

The real recession is a financial situation that relates to the Economic recession of 2009. It affected most countries in Europe, Canada, the USA, Mexico and some parts of Asia. Falls into the category which is the CapEx boom cycle. It derails the economic expansion causing disruptions, shutdowns, and variances in pricing. Hence, also affecting the stock markets and financial institutions that include banks and building societies. Arises due to conditions such as wars, disasters or other disruptions that can push the economy into contraction.

COVID-19 can’t cause a real recession according to most economists as the tendency is more to infect the host country and some other countries. However, there shall be some losses that relate to trade, finance, travel, and education. The losses from coronavirus might increase as well depending on the recovery time.

Policy Recession

The policy recession happens due to the central banks leaving the rates too high as compared with neutral rates. This results in tight financial conditions and credit intermediation.

Financial Crisis

A financial situation that creates imbalances and brings a country performances down in terms of financial growth and economic growth.

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COVID-19 can’t be seen as something contributing to financial imbalances. However, financial stress could arise due to strains in cash flows. This is particularly likely to happen in SMEs and Medium enterprises. Larger companies are less likely to get affected because of many reasons. They are far more prepared to handle financial crisis situations and economic meltdowns as compared to smaller companies.

role of global leaders
the global economy


The role of global leaders in the current situation that relates to COVID-19 is significantly huge. Especially the leadership of China, the USA, Canada, Germany, and Italy. Leadership’s role is vital under areas that relate to decision making. It also includes making health policies regarding coronavirus and creating practical awareness. Hence, in their countries in supervision with the World Health Organization, they must make sure for people’s safety. Leaders shouldn’t become dependent on projections as the financial markets are experiencing great uncertainty. The leadership must plan the best and prepare for the worst-case scenarios in terms of cost and consequences.

In such a scenario that relates to risks and crisis. The leaders must analyze and address the challenges associated. These challenges are economic, social and national level challenges. They must also play an active role in determining the impacts of the COVID-19 virus, and its recovery process. Furthermore, how long the impacts will take place in their countries.

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MBE Digital Media Team
MBE Digital Media Teamhttps://blog.mbeforyou.com
MB Enterprises is an independent, Canada based business solutions and services providing group that is envisioned to lead the industry through trend-setting innovation and ground-breaking ideas.

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